Qantas power over Australian airports a ‘myth’

Camera IconQantas is locked in a bitter dispute with Perth Airport in the Supreme Court over a claim it has underpaid for services. Credit: Simon Santi

Qantas has ridiculed suggestions by airports it has market power, saying the loss of a “single” daily Perth-Melbourne service would cost it 10 times more than Perth Airport.

In the latest salvo in its increasingly bitter war with Australia’s airports, Qantas described as a “myth” claims it could dictate terms to the operators of the country’s airfields.

The Productivity Commission is investigating whether Australia’s major airports should be subject to greater economic regulation amid claims they have too much market power.

But in a draft report released in February, the commission largely dismissed those claims, finding airports had “generated returns sufficient to promote investment while not earning excessive profits”.

It also rejected calls, led by Qantas, for an independent arbitrator to be appointed in instances where airlines and airports could not agree on pricing arrangements, saying this would have a “chilling” effect on investment.

Faced with its own claims of market power in negotiations with airports, Qantas said such views were “based on a misconception” the carrier could avoid using airports and were “simply not true”.

The airline, which is Australia’s biggest and has a market capitalisation of $9 billion, cited analysis it commissioned by Frontier Economics to argue the airports wielded far more clout.

“Frontier Economics considered the relative costs faced by Qantas Group and Perth Airport from the threat of withdrawal of a single, daily return flight between Melbourne and Perth,” Qantas said in its submission to the PC’s draft report.

“(The analysis) found that Qantas Group would have more to lose — up to 10 times more — than Perth Airport because of the critical importance of Perth to Qantas customers, broader network and operations.”

Qantas also said its planned to boost its domestic WA capacity by 14 per cent while adding an extra 100 interstate flights during the “northern summer”, contradicted claims it was throwing its weight around.

Perth Airport is suing Qantas in the Supreme Court, alleging the airline has underpaid it by about 40 per cent for access to the airfield and terminal facilities.

It is believed the debt allegedly owed by Qantas has grown from $11.5 million to about $20 million since the time Perth Airport lodged its statement of claim late last year.